Gender Economics: Why do women earn less than men and what can we do about it?
This challenge was introduced by Johanna Möllerström, Katharina Wrohlich, and Jana Friedrichsen, researchers at DIW German Institute for Economic Research.
Women earn less than men, in Germany and all other countries of the world. The so-called gender wage gap (also: gender pay gap), the average gap between the gross hourly wage of men and women, amounts to about 21 percent in Germany.
Different explanations have been put forward to explain this gap. For instance, it can be shown that part of the gap is explained by women choosing jobs that pay lower wages. Moreover, women take career breaks much more often and for longer time spans to take care of kids and family. These career breaks are another reason why women are paid on average lower wages than men. But even when we control for such individual characteristics like education, work experience, job choice, working hours etc., unexplained residual remains, a wage gap that cannot be traced back to individual differences in these variables.
Behavioral economists, therefore, investigate to what extent psychological factors can explain why men and women take different labour market and career decisions. These studies indicate, for instance, that women react differently to competition, the pressure to perform, and risk, factors that in turn characterize many labour market-related decisions. Furthermore, women appear to behave differently in negotiations. In addition to individual preferences, however, our behaviour is influenced by the society’s stereotypes and expectations about appropriate behaviour. How much of the observed differences is explained by individual preferences and to what extent these are again determined by society remain open questions?
What would happen if women chose the same jobs as men? Would the gender wage gap disappear?
Which political and managerial interventions could help to reduce the gender wage gap?
Can and should we try to influence individual preferences to reduce the gender wage gap?
Which psychological differences between women and men do you think there are that may contribute to the gender wage gap? How could these psychological factors be investigated?
Claudia Goldin (2015): How to achieve gender equality. Milken Institute Review. 2015, July (Q3): 24-33., https://scholar.harvard.edu/files/goldin/files/gender_equality.pdf
Christina Boll, Anja Rossen and André Wolf (2017): The EU gender earnings gap: Job segregation and working time as driving factors, Journal of Economics and Statistics, 237(5): 407-452, https://www.degruyter.com/downloadpdf/j/jbnst.2017.237.issue-5/jbnst-2017-0100/jbnst-2017-0100.xml
DIW Wochenbericht Nr. 43 (2017): Gender Pay Gap, www.diw.de/documents/publikationen/73/diw_01.c.567545.de/17-43.pdf
Muriel Niederle and Lise Vesterlund (2011): Gender and competition. Annual Review of Economics, 3(1): 601-630. http://www.annualreviews.org/doi/abs/10.1146/annurev-economics-111809-125122
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Andreas Leibbrandt and John A. List (2014): Do women avoid salary negotiations? Evidence from a large-scale natural field experiment. Management Science 61(9): 2016-2024. https://doi.org/10.1287/mnsc.2014.1994
Antonio Filippin and Paolo Crosetto (2016): A reconsideration of gender differences in risk attitudes. Management Science 62(11): 3138-3160, https://doi.org/10.1287/mnsc.2015.2294
Katherine Baldiga Coffman (2014): Evidence on self-stereotyping and the contribution of ideas, The Quarterly Journal of Economics, 129(4): 1625 -1660, https://doi.org/10.1093/qje/qju023
Olga Shurchkov (2012): Under pressure: Gender differences in output quality and quantity under competition and time constraints, Journal of the European Economic Association, 10(5): 1189 -1213, https://doi.org/10.1111/j.1542-4774.2012.01084.x